Article by:

Austin Young

Topics:

Solar

Published:

May 14, 2024

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Sustainability and Profitability: The Balance in Real Estate

Sustainability in real estate means having energy-efficient structures with low environmental impact or carbon footprint. As it stands, the real estate sector uses up to 40% of the world’s energy and contributes around 30% of greenhouse gases that cause climate change. Climate change, in turn, results in rising sea levels and extreme weather conditions that negatively affect real estate prices and profitability.

Real estate owners, investors, and asset managers are recognizing that incorporating sustainability into their business management and processes can remarkably improve profitability. Shifting to sustainable practices means complying with environmental, social, and governance (ESG) standards. For investors, compliance with ESG is one of the common criteria when evaluating the long-term success of any business. But not all sustainable practices significantly improve a real estate property’s financial performance. In this post, we look into solar energy as a tool for achieving a balance between sustainability and profitability in real estate.

How Sustainability Improves Real Estate Financial Performance

ESG-focused real estate practices increase profitability and responsibly improve financial performance in the following ways:

Increased Resilience and Better Risk Management

Real estate is prone to climate change-related damage. And low resilience to climate damage not only results in increased capital costs from direct physical damage but also added costs that come in the form of high insurance premium rates, environmental damage, low retention and high turnover of residents, and reduced rental rates. Investing in sustainability can lower these capital costs and increase revenue.

Furthermore, state and federal regulations drive real estate investment trust (REIT) investors to favor companies that prioritize ESG improvements. REIT investment portfolios are considered high quality when they consist of properties with high resilience and low investment risks. These properties are high value due to their safe location, energy efficiency, and compliance with local environmental regulations.

Improved Transparency

Transparency has never been more critical in business. Investors and consumers value companies focused on more accurate information, higher ethical standards, and stricter compliance with regulations. By committing to sustainable ESG frameworks, real estate companies and property owners promote transparency and increase profitability.

Transparency through sustainable practices builds trust with investors, residents, and service providers. And this increased trust separates a brand from its competitors, boosts organic marketing, and drives up sales and revenue.

Increased Market Demand

The increasing number of sustainable real estate market choices is causing a rise in market demand, which in turn increases the property value of sustainable properties. Provided with more sustainable choices, investors and consumers are willing to pay a higher premium to avail of these choices. More and more residents are favoring green-certified and sustainably retrofitted properties that are managed responsibly by socially conscious companies.

With the high market demand, sustainability-focused properties can increase profitability through higher purchase or rental rates, improved return on investment (ROI), and buyer or resident attraction and retention. And the forecast is that this increasing trend will continue in the foreseeable future. Recent market surveys show that among millennials and Gen-Z demographics, sustainability is a main criterion for their real estate decisions.

Sustainable Real Estate Through Solar Power

Investing in solar power takes your property closer to achieving its sustainability and profitability goals. Switching to solar power provides significant and long-term sustainability results. A property can be made sustainable through the use of ‘green’ building materials, effective maintenance methods, or upgrading to energy-efficient lighting and appliances. But unlike these ways, investing in renewable energy results in more valuable and long-term benefits such as:

Cheap and efficient energy. Sunlight is free and converting it to solar power is more efficient and more environmentally friendly than burning fossil fuel.
Decreased reliance on the power grid. Relying on the power grid means paying high utility costs, inefficient energy, reduced weather resilience, and being susceptible to blackouts or outages.
Positive market effects. With the increasing demand for sustainable real estate, solar-powered properties attract and retain more residents.
Solar power promotes transparency. Unlike power from the grid, solar power management is more transparent. With Ivy Energy’s proprietary algorithm and utility-grade monitoring, property owners, managers, and residents can access clear and accurate solar power information to make critical investment and energy usage decisions.

Sustainability and Profitability: Essential for the Future of Real Estate

Achieving a balance between sustainability and profitability is not only possible but also essential in the real estate sector. With the recognition of the significant impact of climate change on property prices and profitability, sustainable practices have emerged as a vital aspect of successful business management and investment strategies. By complying with ESG standards and embracing sustainable initiatives, real estate companies can enhance their financial performance in various ways.

Investing in solar power provides a path toward long-term sustainability by offering cheap and efficient energy, reducing reliance on the power grid, and attracting more residents due to the increasing market demand for sustainable properties. At Ivy Energy, we understand the importance of sustainability and profitability in real estate. Our multifamily solar solutions provide hassle-free implementation, helping you strike the perfect balance between environmental responsibility and financial success. By harnessing the power of solar energy, you can not only reduce your carbon footprint but also generate a new NOI for your property, all while sharing the benefits of sustainable energy with your residents.

Want to make your real estate portfolio more sustainable and profitable? Contact Virtual Grid for a free demo now!

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Pioneering the Future of Multi-Tenant Solar Energy Management

2024 was a trailblazing year for Ivy Energy, where we shattered barriers, redefined possibilities, and delivered innovative solutions to address the multi-tenant solar split incentive challenge. By driving product advancements, forging impactful partnerships, and scaling operational processes, we empowered multi-tenant properties to embrace clean energy with confidence.

A Year of Growth and Market Expansion

Ivy has grown its active project pipeline 450% compared to 2023, with a line of sight to clear +600% in active projects by the end of the year. Our tech-enabled solutions empower more communities than ever. With $18M in Series A funding (Read more) and the strategic acquisition of Glow Energy (Read more), we are poised for unprecedented growth and impact. This investment enables us to enhance our technology, streamline operations, and expand our reach into new markets nationwide.

Entering new markets with increased resources allows us to address diverse energy challenges and deliver tailored solutions to property owners and tenants. Additionally, the launch of our consulting arm provides expert guidance for our clients and partners to save money and enhance ROI while navigating intricate solar investments.

Meaningful Operational Updates

At Ivy, innovation isn’t just about technology—it’s about creating digital tools that empower our clients and their tenants:

PropTech Integrations: Partnered with RealPage, Entrata, and Yardi to automate rent roll syncing, move-in/move-out updates, and direct charge posting to resident ledgers. These integrations reduce monthly processing time by up to 2 hours per property while enhancing data accuracy and operational efficiency.
NEM Credit Delay Optimization: The Utility Coordination team adopted the CPUC informal complaint process to reduce delays in NEM activation after PV solar system commissioning. This improvement cut the average resolution time for delayed NEM credits from 123 days in 2023 to 49 days in 2024, allowing property owners to see Net Operating Income over two months sooner on average.

Platform Advancements that Lead the Industry

Our engineering team broke new ground, ensuring our platform stays ahead of the curve:

Migrated to a new infrastructure processing system for faster processing and further automation improvements across operational features.
Introduced IvyDual in response to regulatory requirements in California, which allows us to enter new markets where consolidated billing is not viable.
Achieved SOC 2 Compliance, reaffirming our commitment to data security. (Read more)
Built initial public API for Conservice integration and new utility data access pathways, strengthening our platform’s versatility and reliability.

Empowering Positive Experiences with CX

At Ivy Energy, our customers rely on us as true partners in their clean energy journey, helping them achieve long-term NOI growth while providing exceptional support for property owners and tenants. We consistently deliver this experience by simplifying complex utility processes and offering our white-glove service that ensures our clients feel supported, informed, and empowered to succeed. This year, Ivy’s Customer Experience Team launched two significant platforms:

Ivy Implementation Portal: A step-by-step, transparent portal that simplifies solar implementation for our clients and partners across multiple organizations. (Watch a walkthrough of the new portal here.)
Resident Help Center: Educate tenants about the solar program with helpful resources and offer direct support online or by phone. (Explore the Help Center)

Shaping the Future Through Thought Leadership

In 2024, Ivy Energy reinforced its position as an industry leader; our Virtual Grid 3.0 impressed the judges and earned first place in Solar Power World’s “Best in Show” award for large-scale solar innovation. (Read more)

Leadership team members Alex Dogan, Tanya Kuhn, and Sean Nam were celebrated in San Diego Business Journal’s Leaders of Influence in Technology 2024 for their contributions to advancing sustainable energy. (Read more) Ivy was also featured in Alt Energy Magazine (Read more), San Diego Business Journal (Read more), and on Solar Academy. (Read more)

Logan Carter showcased Ivy’s groundbreaking innovations in a main stage speech at Cretech NY (Watch here), an engaging appearance on the IMN Podcast (Listen here), and a deep-dive interview with Chris Moreno, also known as “Mr. PropTech.” (Watch here) Ivy’s policy team further expanded its influence by authoring a Model VNEM Whitepaper, a critical guide to enabling multi-tenant solar models nationwide. (Read the Whitepaper).

Measurable Environmental Impact

This year, Ivy Energy amplified its environmental contributions, with contracted units in implementation set to offset an astounding 109 million pounds of CO2. Meanwhile, active units have already offset 9 million pounds of CO2, demonstrating our ongoing dedication to reducing carbon emissions.

Looking Ahead to 2025

As we celebrate 2024’s successes, we are always looking to the future. In 2025, we’ll continue to push boundaries, deliver innovations that empower our clients, improve tenant experiences, and lead the multi-tenant housing sector toward a sustainable future.

A Message from Dover Janis, CEO of Ivy Energy

“2024 was a year of progress and adaptation. While utility-caused delays challenged our growing pipeline, our focus on agile problem-solving reduced their impact and kept the market moving forward. This is a testament not only to the dedication and focus of our team but also to the strong macro-level foundation that the onsite energy business model provides for real estate owners, even in the face of monopoly-driven resistance. With a large and expanding customer base and hundreds of projects, we have continued to validate the transformative potential of clean energy solutions for shared communities. I’m incredibly proud of our team—now among the most mature, knowledgeable, and experienced in the industry—as we trail blaze the path forward. The market is primed to grow and drive transformative change in local communities. I’m deeply grateful to our partners and customers, whom we have the privilege of serving every day as we continue to lead the way.”

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